Update highlights

Natzke dave
Dave Natzke
Editor / Progressive Dairy

January 2023 Class I base price lower

January 2023’s Federal Milk Marketing Order (FMMO) advanced Class I base price hit an 11-month low. While still negative, the “average-of” Class I mover formula had the smallest impact since July 2022.

At $22.41 per hundredweight (cwt), the January 2023 Class I base is down 17 cents from December but still $2.70 above January 2022.

Class I zone differentials are added to the base price at principal pricing points to determine the actual Class I price in each FMMO. With those additions, January Class I prices will average approximately $25.23 per cwt across all FMMOs, ranging from a high of $27.81 per cwt in the Florida FMMO 6 to a low of $24.21 per cwt in the Upper Midwest FMMO 30.

Analyzing the Class I mover, the spread in the monthly advanced Class III skim milk pricing factor ($9.54 per cwt) and advanced Class IV skim milk pricing factor ($11.62 per cwt) is $2.08 per cwt, the narrowest since July 2022.

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Based on Progressive Dairy calculations, the Class I mover calculated under the “higher-of” formula would have resulted in a Class I base price of $22.70 per cwt, 29 cents more than the actual price determined using the “average-of plus 74 cents” formula.

The economic impact on uniform milk prices within individual FMMOs depends on Class I milk utilization in each FMMO.

The 2022 average Class I base price was $23.66 per cwt, up $7.33 from the 2021 average of $16.83 cwt and the highest annual average on record: 37 cents higher than the average in 2014.

USDA awards dairy export funding

The USDA’s Foreign Agricultural Service is awarding nearly $203 million to more than 60 agricultural organizations to help expand U.S. export markets for farm and food products. Of that total, about $5.53 million is directed to the U.S. Dairy Export Council (USDEC). The dairy funding includes:

  • $4.87 million through the Market Access Program (MAP), providing money for marketing and promotion activities around the globe, including market research, technical assistance and support for participation in trade fairs and exhibits
  • $659,239 through the Foreign Market Development (FMD) Program: This program focuses on generic promotion of U.S. commodities, rather than consumer-oriented promotion of branded products. 

For further information on the programs and a list of fiscal year 2023 funding recipients, click on the links above.

November cull cow marketing mixed

Marketing of U.S. dairy cull cows through U.S. slaughter plants declined slightly in November and remained behind last year’s pace.

At 250,900 head, the November total was down 1,900 from October but about 5,600 more than November 2021. Both November 2021 and 2022 had 24 non-holiday weekdays and Saturdays.

The USDA’s Milk Production report estimated there were 9.42 million cows in U.S. herds in November, up about 38,000 head from the same month a year earlier.

At 2.78 million head, year-to-date (January-November 2022) cull dairy cow slaughter was about 57,600 less than the same period a year earlier. It’s the lowest 10-month total to start the year since 2017.

Heaviest dairy culling during November 2022 occurred in the Upper Midwest (Illinois, Indiana, Michigan, Minnesota, Ohio and Wisconsin) at 60,600 head. That was followed by the Southwest (Arizona, California, Hawaii and Nevada), where 60,400 dairy cows were marketed for beef. 

Other regional totals were estimated at 41,700 head in Delaware, Maryland, Pennsylvania, West Virginia and Virginia; 31,000 head in Alaska, Idaho, Oregon and Washington; and 29,300 head in Arkansas, Louisiana, New Mexico, Oklahoma and Texas.

Beef cow marketing also declined slightly in November, down 6,300 head from October but was 16,600 more than November 2021. Year-to-date beef cow slaughter is up more than 393,000 compared to the same period in 2021, topping 3.6 million head.

Primary data for the USDA’s Livestock Slaughter report are obtained from reports completed by inspectors from the USDA Food Safety and Inspection Service (FSIS). These counts are combined with data from state-administered non-federally inspected (NFI) slaughter plants to derive total commercial slaughter estimates. The USDA estimates there are approximately 900 livestock slaughter plants in the U.S. operating under federal inspection and nearly 1,900 state-inspected or custom-exempt slaughter plants.

Butter inventories continue to shrink

With strength in export and domestic markets, cheese and butter inventories in cold storage were down to end November. According to the USDA’s monthly Cold Storage report, released Dec. 22:

  • Total natural cheese stocks were estimated at about 1.43 billion pounds, down about 1% from October 2022 but up 1% from November 2021. Stocks of American cheese were estimated at about 815.7 million pounds, down 2% from both the previous month and year.
  • Butter stocks were estimated at 199.7 million pounds, down 5% from November 2021 and down 17% from October 2022.

The USDA’s preliminary Milk Production report indicated November 2022 U.S. milk output was up 1.3% compared to November 2021.